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Feb 06, 2024

FCA clarifies drastic UK listing rules reform proposal

Reforms aim to encourage more diverse range of companies to list on UK markets

The Financial Conduct Authority (FCA) has provided greater clarity on its upcoming UK listing rules reform proposal, stating that its purpose is to give choice back to issuers, investors and markets.

The proposed changes include replacing the existing standard and premium listing segments with a single category for equity shares in commercial companies. If applied, the listing reform will also scrap shareholder votes on transactions such as acquisitions to reduce ‘frictions’ for companies. 

In a media briefing, Clare Cole, director of market oversight at the regulator, said the reforms are aimed at encouraging a more diverse range of companies to list and grow on UK markets while promoting more investment opportunities for investors.

‘These are the most wide-ranging consequential reforms to the UK capital markets in more than three decades,’ she explains. ‘Thriving capital markets are the cornerstone of a strong economy and drive the sustainable growth that powers our economic ecosystem.’

Following the FCA consultation period on the listing rules in May last year, which set out a range of potential measures for discussion, the regulator has republished a more user-friendly UK listing rules sourcebook to provide greater clarity to the market and sets out exactly what the reform aims to achieve.

During the consultation phase of the reform process, Cole says the FCA spoke with participants from across the entire market ecosystem, including current and prospective issuers, investors, asset managers and owners, pension scheme advisers, trade bodies and stakeholder representatives. She says one overarching message that emerged from discussions was the need for a reset of the UK listing regime machine in order to keep attracting investors.

‘The disadvantage faced by UK listed companies when competing on the global M&A stage is very real,’ she details. ‘It manifests itself in the form of processes that increase issuer and shareholder costs. Our proposals have been aimed at addressing the sources of friction and inefficiency in our listing rules.’

Alongside the listing rules reform proposal, the FCA is also working on proposed revisions to the UK prospectus and public offer infrastructure.

‘Transparency is the lifeblood of markets,’ Cole adds. ‘With our focus on fostering innovation and growth, we want to make sure the racetrack is ready for spectators and the team is primed for its best performance.’